Meddling with Invisible Borders? How Brexit will affect the island of Ireland

With
the advent of the Good Friday Agreement in 1998 new opportunities opened up for
cross border cooperation and trade. At the time border checkpoints and military
lookouts were positioned across the North and border counties of the island.
These days, the checkpoints and military towers are long gone. If you drive
from Northern Ireland into Southern Ireland, blink and you will miss the fact
that you have crossed an ‘invisible’ international border. You would be in good
company though, a total of 14 million trips are made across the border every
day between Dundalk in Ireland and Newry in Northern Ireland for business and
shopping and more. The two economies of the island are inextricably linked and commerce is
strong with Tourism equating to 2.1m visitors (1.7m North to South/400k South
to North) and Cross
Border trade in manufacturing accounting for €3.1 billion in 2014 (€1.75bn North
to South and €1.3bn South to North). Agri-food sectors are also vitally
important to both jurisdictions and trade in food and drink moves both ways.

In terms of jobs almost 15,000 people commute to work on a daily cross
border basis consisting of 8,300 North to South and 6,500 South to North. The
2011 Census highlighted that ‘Proportionally twice as many (0.4 per cent)
Northern Ireland residents commuted to Ireland to work or study as commuted
from Ireland to Northern Ireland (0.2 per cent)’. A total of 3,064 students are
studying in both jurisdictions from either side of the border which breaks down
into 719 North to South and 2,345 South to North. The north of Ireland is
reliant on the Southern Irish economy and cross border trade is up 7% since
2013 an economy that was in recovery since 2010.

Infrastructure initiatives have also benefitted both sides of the island
and facilitated cooperation such as the development of the Dublin-to-Belfast transport
corridor, the
fibre
optic communications networks “Project Kelvin” and investment by both governments into City of Derry
Airport which sees 38% of its passengers being from the Republic of Ireland.
The Single Electricity Market (SEM) is also under development and will lead to
lower costs which at present are some of the highest in Europe. The Good Friday Agreement
also saw the creation of 7 new North / South Bodies amongst them InterTrade
Ireland and Tourism Ireland. Economic benefits have also come by cross border
programmes including Interreg, Peace, European Fisheries Fund etc. and a total
of nearly £2.5billion came into Northern Ireland during the last EU funding
round (2007 – 2013).

Challenges
exist for both jurisdictions which could be affected by the UK voting to leave
the EU. They are both two very different economies and are competing against
one another for business/foreign direct investment (FDI) but have shown strong
commercial cooperation when they are exporting. Outside of the Belfast/Dublin
corridor connectivity is poor across the island and there are significant policy
anomalies in some key areas e.g. VAT on tourism is 20% in Northern Ireland v.s.
9% in the Republic of Ireland. There is also exchange rate volatility.

Northern Ireland is also very dependent on the public sector and
receives almost £10bn in subvention annually from the UK and is a low productivity
economy with low wages, recovery in NI remains fragile. Ireland’s economy on
the other hand is on a much stronger footing than Northern Ireland’s despite
the fall-out from the recession and appears to be re-emerging. Ireland as a
whole has concentrated on FDI and exports which has driven growth. The economy
however can still be volatile and government debt is still an issue.

Brexit
poses a considerable threat for Northern Ireland. The Impact on trade
links is a major concern and Ireland is Northern Ireland’s largest export
trading partner. The USA is the biggest trading partner for most other regions
of the UK. Northern Ireland is the only part of the UK with a land border with
an EU country – so there are serious concerns around the re-emergence of border
controls and restriction of free movement.
Recent polls have shown that 86% of people do not want the border to
return1. Ireland will also be affected if the UK votes to leave. Brexit
could cut 20 percent off Irish trade and knock 1.1 percentage points off GDP
growth before the end of 2017 (Source; British Irish Chamber of Commerce)

Trade
is also significant. The UK is Ireland’s largest trading partner with 1
billion worth of trade flowing between the islands every week and 3 billion worth of cross
border trade between north and south Ireland every year2. Rather than focusing on a
BREXIT Northern Ireland should be thinking beyond and explore
further synergies between the two economies around areas such as tourism,
agriculture, education & training, research/technology/innovation, energy
and business clusters. The island needs to find easier ways to
reduce business costs e.g. utility costs and make it easier to do business on a
cross-border basis such as cutting red tape and facilitate connectivity across
the entire island. There should be a harmonisation of regulation, governments
on both sides of the border should align and co-ordinate relevant policy making. Too reduce the UK
subvention there is scope also to explore potential for further shared
services both at central and local government level.

Northern Ireland Republic of Ireland

Population

1.9m

4.6m

Value of the Economy (GDP)

£38bn (2012)

€261bn (2015)

Output per head

£21,000 (GDP Per Capita)

€56,000

Number of Jobs

837,000

2 million

Unemployment Rate (%)

6.2%

7.8%

Average Annual Earnings

£20,000

€28,500

Public sector share of jobs

28%

18%

Efficiency savings could also be made in certain areas to help support
both businesses and the wider economies such as an Integrated Single
Electricity Market(I-SEM) which is one way of making utility costs more
competitive in Ireland. Northern Ireland and Ireland have among the highest
energy costs in the EU. The interconnector project will benefit the island as a
whole by improving security of supply by providing a reliable high capacity
link between the two parts of the all-island transmission system; allowing the
all-island wholesale electricity market to work more efficiently, enabling
wider competition between power generators and electricity suppliers throughout
the island, and therefore ensuring that future electricity prices will be as
competitive as possible; and enabling more renewable generator capacity (mostly
wind generation) to be connected to the electricity network. A return of the
border would hinder all this from happening and create physical and
psychological barriers to trade and engagement and further cooperation of the
peoples of the island

Having
personally worked on PEACE projects in Newtowncunningham, Donegal a town 8
miles from the border with Derry City there is also of course the reality that
anything that puts physical border controls back up will destabilise the peace
process and people will feel 'penned' in by border controls which would result
in possible paramilitary activity increasing. Families and friends will also be
separated by a physical border and the risk to the stability in the peace
process is perhaps the biggest worry for the people in the border counties and
Northern Ireland.

All figures related to 2014 (sourced from InterTrade Ireland) except
Jobs which are taken from both Census of Population 2011

Polly Lavin is a freelance writer, researcher and MSC graduate. She has a
background in EU project management and has previously developed and
delivered peace projects in the border counties and North of Ireland.

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